2013-01-29 - Why hasn't the Bank of Canada

2013-01-29 - Why hasn't the Bank of Canada - Why hasnt the...

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Why hasn’t the Bank of Canada been watching yield curve data? By Mike Moffatt January 29, 2013 – The Globe and Mail Inflation has once again gone outside the bounds of the Bank of Canada’s 1- to 3-per- cent target, falling to an annualized rate of 0.8 per cent. This comes on the heels of Mark Carney’s admission that economic growth and inflation are much slower than they had an- ticipated a few months ago. Economic forecasting is incredibly difficult, with so many factors influencing the rate at which an economy grows and the rate of infla- tion. There are a number of economic indica- tors that a forecaster can use to predict the movement of the economy. The most notable of these is the yield curve, which is the differ- ence in interest rates on bonds of different ma- turity lengths. For the past nine months, the yield curve has been screaming that the econ- omy was slowing down. Yet the Bank of Can- ada chose not to listen.
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